Business North - Around The Region - Duluth & Superior NewspaperEssar may lose out on state infrastructure funding

3/18/2014by Beth Bily

Infrastructure funding from the state of Minnesota for the Essar Steel Minnesota project might become unavailable if construction doesn’t move forward by the time grant deadlines expire later this year.

At last week’s Itasca County Regional Rail Authority meeting, county commissioners were told that deadlines are quickly approaching.

According to information provided by Itasca County, about $66 million was authorized by the state for Itasca County, the rail authority and Nashwauk Public Utilities to develop infrastructure in support of the mining development at the former Butler site near Nashwauk. Work includes roadway improvements, railroad track, a sanitary sewer and potable water extensions.

As of Dec. 31, about $62.65 million had been spent and another $150,000 was encumbered but not yet paid. A roadway project, with an estimated cost of $250,000 is scheduled, but not yet started. If state dollars are withheld, Essar may have to pay the tab.

Dave McKenzie of SEH told commissioners last week that there’s a little more than $2 million in state funding that remains. Access to those state funds, however, ends on June 30 unless the state decides to extend availability. There already have been four extensions and there is concern that if the company isn’t making construction progress, another extension will be difficult to obtain.

Construction on the project has all but halted, commissioners were told last week. The company has yet to secure financing to complete the $1.7 billion project and contractors have left the site due to non-payment.

While Kevin Kangas, Essar’s director of HSE, government and public affairs, wasn’t present at last week’s rail authority meeting, he did send correspondence, which was read into record by County Administrator Trish Klein. She relayed that the company reports being 80 percent through the financing process and expects “100 percent completion soon.” She added, however, that there is no clear date established for financing completion.